Michael C. Maibach, President
& CEO
European-American
Business Council
202-637-3444 ~ www.EABC.org
EABC PRAISES ZOELLICK
& LAMY ON CHINA VAT ISSUE
Washington, DC – March 31,
2004 – The European-American Business Council today applauded the
European
Commission announcement that it would join in the case brought by the
US
against China’s discriminatory tax rebate policy for semiconductors.
Japan
has also announced that it would seek an end to the discriminatory
practice
by China.
“The EU action underscores
EU-US governmental agreement that China’s semiconductor VAT policy is
an
unfair distortion of trade-related investment patterns,” stated Michael
Maibach, President & CEO, European-American Business Council. “The
EABC applauds the strong stand that the USTR and EU Commission have
taken
together to insure that China adheres to the commitments it made when
it
entered the WTO. Trans-Atlantic cooperation in support of free and fair
trade is always welcomed.”
China levies a 17% VAT on
manufactured goods such as semiconductors. However, to encourage local
semiconductor production, China rebates most of the VAT payments for
domestic
producers while continuing to charge the full VAT on imported products.
This policy constitutes trade discrimination against imported products
inconsistent with China’s WTO “national treatment” obligations. On
March
18, U.S. Trade Representative Robert Zoellick requested formal
consultations
with China under the World Trade Organization’s (WTO) Dispute
Settlement
procedures. Today, the EU Commission announced that it had requested
participation
in that case as an interested third party.
The European-American Business
Council represents ~50 major US and EU-based companies which support
open
markets and a rules-based trading system. “EABC members actively
supported
China’s entry into the WTO two years ago, and share a common desire to
support a rules-based WTO trading system. If national treatment rules
are
allowed to be violated in this case, other instances may follow. China
is too important a market to allow this practice to spread to other
sectors,”
concluded Maibach.
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